Cargill vensevela case study

Part II: Pricing

What inflation would you anticipate for next year? This affects local costs/

What exchange rate would you anticipate for next year? This rate affects foreign costs.

Assume all costs are constant per kilogram except for inflation and exchange changes

How much will total costs per kilogram be next year?

Just to maintain margins at the same levels as today, how much should Cargill charge per Kg. to distributors next year (2007) given expected inflation and devaluation?

How much profit would a farmer have per hectare ifhe purchases seed from Cargill?

How much profit would a farmer have per hectare if he purchases seeds from Pioneer?

Dividing the difference between these figures by the number of kilograms needed per hectare (20) gives the additional value per kilogram given by Cargill.

Given the above, what is the maximum price that Cargill can charge without losing customers to Pioneer?

What price would you charge? If it is not much more than the current price, check your work.